Asset Building News Week, August 19-23

The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include public assistance, homelessness, jobs, debt, and retirement.

Public assistance

The Cato Institute released a report on welfare this week that received a lot of press attention. While the main conclusion provides an exciting headline for the media, “Welfare pays more than work,” many commentators responded by showing why that claim is “total nonsense.” After explaining why the conclusion is baseless, Josh Barro for Business Insider offered an alternative to further cutting public assistance: “Make benefits more generous by extending their phaseout ranges, so people don't lose as many benefits as they earn more income.” Welfare should provide a ladder out of poverty; it shouldn’t trap people in it. The National Journal's Matt Vasilogambros linked the “welfare pays more than work” mindset to the House’s passage of a Farm Bill last month without funding for SNAP. Craig Harrington for Media Matters summarized the arguments against the report’s findings and put it into the context of a similar Cato report released in 1995.

As an indication of just how important these assistance programs are to so many people, a backlog in processing for SNAP benefits recently lead to the near total depletion of a local food bank in Lincoln County, North Carolina. Clearly, many residents rely on the program for basic sustenance. And lest critics argue that this is an isolated phenomenon, Matt Bruenig parsed the evidence this week showing the “high probability of being poor.” Even taking into account counter arguments about the generous assumptions made in the original assessment, he found that over half of all people in the U.S. spend at least one year of their adult life in poverty.

Housing and Homelessness

The Department of Housing and Urban Development (HUD) issued a rule change recently regarding the burden of proof for violations of the Fair Housing Act. HUD decided that only showing disparate impact, rather than the higher standard of discriminatory intent, is all that is necessary to prove violations of the Fair Housing Act. Such a rule change could potentially open up many municipalities to legal action, says J. Rosie Tighe writing for the Shelterforce blog. The issue of fair housing reached into the debate over how to alleviate homelessness this week as Matthew Yglesias pointed out an obvious, though under-utilized, method to achieving less homelessness: give homeless people a place to live. “You build more housing, including more units designed to be cheap. Then where necessary you step in and give people housing,” he explained. “Once people have a place to live, you have a solid foundation to work with people on other problems they may be having in their life.” Yglesias’s piece came in response to a post on the website Medium that advocated for teaching homeless people java script code on the street as a way to build job skills. Demos also responded to this post, pointing out along the way the “wildly offensive notion” that someone could identify on sight who are the “unjustly homeless.” Yet the main point of the piece is to point out that this kind of thinking is a result of the mistaken notion that homelessness and poverty are uncommon phenomena, when in fact they are very common. Eric Oberdorfer ran a piece along similar lines, explaining that rural homelessness is much more common than we think, though less visible.

Jobs

Despite slightly good news from the labor market and from factory data suggestive of some small improvements in the economy, those gains haven’t reached average households yet. Indeed, we would normally associate an improvement in the economy with greater savings for retirement, but Dan Kadlec for Time explains, “Despite a noticeable uptick in the economy, Americans continue to fall farther behind in their retirement savings.” One obvious reason: “Many Americans just don’t have a lot of extra money left after paying the bills.” EPI released a new analysis showing that wages from 2000 to 2012 were flat or declined for the bottom 60% of American workers. According to Derek Thompson at the Atlantic, ESPN's President believes that this wage stagnation is the biggest threat to his company's prosperity. Peter Orszag examined another strange feature of the current economy: more job openings but little hiring. One explanation for which could be because employers are “offering jobs at wages that are too low to attract good applicants.” Whatever the full explanation is, the numbers are shocking: while the “number of job openings has risen almost 50 percent, . . . actual hiring has gone up by less than 5 percent.”

The low-wage economy is still trucking along, though, and David Callahan for Demos raises important social questions about these “indispensable low-wage workers.” “There is so much in our lives that hinges on the lowest paid workers in America showing up every day and doing their jobs,” he argues. Then continues, “Which raises the obvious question: If these people are so crucial to making our lives work, why are they so poorly paid?” We’re all on the same team in this economy, he says, and improvements in wages and living standards for the lowest-paid workers help the whole team.

Debt

Though retirement savings haven’t increased along with the improving economy, we have seen less debt and fewer delinquencies overall, suggesting that paying down debt may be where Americans are focusing their financial energy. Still, while Stephen Joyce for Bloomberg identifies this positive sign, he also expresses worry over the level of student debt, which is now the “second leading category of debt, . . . trailing only mortgages.” The growing level of student debt is worrying in light of new evidence from Demos showing that, “All other things being equal, people who borrow money to go to college build about $208,000 less in wealth over the course of a lifetime than those who don’t.” So while a college degree is essential to getting ahead in this economy, going into debt to do so is likely to lead to further problems down the road. Sadly, those consequences of debt could be even more extensive than we think. According to Bioscience Technology, “High debt could be hazardous to your health,” especially, it turns out, to that of stressed-out young people with high levels of student debt.

Retirement

The Center for American Progress released a new report explaining a proposal to “make saving for retirement easier, cheaper, and more secure.” The SAFE Retirement Plan, “Secure, Accessible, Flexible, and Efficient,” is similar to other proposals like Sen. Tom Harkin’s USA Retirement Funds and the California Secure Choice Retirement Savings Program. Our Aleta Sprague summarized the plan and compared it to other proposals.

Quick Hits

The Atlantic's Derek Thompson took the "economic pie" metaphor literally, and produced a compelling (and delicious) short video on inequality in America.

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